Yesterday we were the first to report that none other than Vice President Joe Biden's son was joining the board of Ukraine's largest gas producer. It appears to have signaled peak crony capitalist as the new went viral with almost complete disdain. There was one defender though... as The Washington Examiner reports, The White House brushed off questions about any ethical issues as Jay Carney snapped "Hunter Biden and other members of the Biden family are obviously private citizens, and where they work does not reflect an endorsement by the administration or by the vice-president or president."
Russia Ministry of Finance is ready to greenlight a plan to radically increase the role of the Russian ruble in export operations while reducing the share of dollar-denominated transactions. Governmental sources believe that the Russian banking sector is "ready to handle the increased number of ruble-denominated transactions". According to the Prime news agency, on April 24th the government organized a special meeting dedicated to finding a solution for getting rid of the US dollar in Russian export operations. Top level experts from the energy sector, banks and governmental agencies were summoned and a number of measures were proposed as a response for American sanctions against Russia.
If you are in the US, the answer is, of course, "a lot." Elsewhere in the world, not so much.
Stuyvesant Town, Manhattan's largest 'rental community', is back on the block as Bloomberg reports Fortress is preparing a $4.7bn bid for the apartmenet complex whose last 'failed' deal came to epitomize the lax lending based on unrealistic projections of future income that fueled the real estate bubble. Tishman Speyer and BlackRock purchased the 11,000-unit complex for $5.4 billion in 2006 - a record at the time - helped by a $3bn senior loan which was sliced-and-diced to investors (and then defaulted upon). But, as one analyst notes, "Stuytown has certainly come a long way since the depths of the crisis,” and Fortress' $4.7bn reflects a "resurgence in pricing." No bubble here at all as they hope rent-stabilized tenants will flip enabling all that fresh cash-flow for yet another yield-chasing investment idea based on the belief that real-estate prices (and rents) never go down (ever)... or potential buyers might remember "too many people have had too many unpleasant surprises at this location."
Overnight saw big demand for Treasuries with futures heavily bid during the European session as the ECB backtracked on its QE promise. That strength continues this morning as the long-end of the Treasury complex rips lower in yield - despite higher than expected inflation - as traders react reflexively to the implication that higher inflation implies less room for an un-tapering Fed and thus now implies no savior for slowing real growth. As the following chart suggests - something is amiss with cross-market expectations...
After a brief warning last week that all was not well in the world of the uber-wealthy as a couple of art auctions did not quite go as expected, The Wall Street Journal reports that there is no need to worry... the contemporary art market is on fire. Christie's in New York made auction history Tuesday when it sold $745 million worth of art - topping its $691.6 million landmark sale last November. The bid behind this record-breaking exuberance... All night long, auction regulars found themselves competing with Asian telephone bidders representing mainland Chinese collectors. Whether Tuesday's sale represents a new high point for the art market - or the next step in a developing cycle – remains to be seen... as one excited buyer noted - "The art market is hot across the board - Pop is selling, Ab-Ex is selling, New Wave is selling, it's all selling."
And just like that, the BLS is reacquainted with soaring food prices. Moments ago the US government reported that producer prices, as part of a newly reindexed PPI series, spiked by 2.1% from a year ago, or a whopping 0.6% surge in April, the biggest monthly jump since January 2010, and up from the 0.5% increase in March. So what caused this surge in producer prices? Why food costs of course, which in April soared by 2.7%.
On Monday we posted "Goldman Says European QE Will Come In 2015 At The Earliest, If At All" in which we showed for the latest time that Europe's grand delusion that 'QE is coming" (a rumor originated late last year by none other than a French bank) and all of which has already been fully priced into peripheral bonds and local stocks by now, is nothing but yet another massive bluff by the former Goldmanite and current ECB head who has taken lying about the future to a whole new level. Today Reuters confirms as much when it reports that while the ECB may ease modestly (a step which will achieve nothing to unclog the loan creation pathway to private companies), it will not undertake QE at this point.
- Vietnam mobs set fire to foreign factories in anti-China riots (Reuters)
- Recession-Baby Millennials Scarred by U.S. Downturn Spurn Stocks (BBG)
- U.S. Agents Start Hunting for Sanctioned Russians’ ‘Shiny Toys’ (BBG)
- Russia moves to oust US from International Space Station (FT)
- China Central Bank Calls for Faster Home Lending in Slump (BBG)
- Geithner Must Give S&P Documents in U.S. Fraud Suit (BBG)
- Samsung's 'crown prince' in focus as father hospitalized (Reuters)
- Yahoo buys mobile 'self-destruct' messaging app Blink only to shut it down (Reuters)
- Goldman’s Twitter banker joins hedge fund (FT)
- Keyword being "unexpectedly": Sony Unexpectedly Forecasts Loss Amid PC Restructuring Costs (BBG)
Overnight Europe got two mini lessons: i) that rumors spread by conflicted French banks about "imminent" ECB QE don't always, if ever, come true, after the ECB spent a decent portion of the overnight session explaining, via Reuters, that while the central bank would engage in "some stimulus for the euro zone economy but falls short of the large-scale effect the ECB could unleash with a major program of quantitative easing (QE) - money printing to buy assets. Such a QE plan is still some way off." Precisely as we warned. The other lesson is that when QE or even hopes of QE fade, bonds get bid due to rotation out of equities into "safe haven" assets. As a result, German Bund yields tumbled with stops taken out (and Goldman stopped out on their Bund short) through the 12 month lows of 1.4% with 10 Year yields following lower and dropping to 2.565% hours ago, or a level not seen since November 1.
With the additional deployment of a submarine and a missile ship, there are now 86 Chinese vessels accompanying the oil rig's installation in Vietnam's Exclusive Economic Zone (EEZ). Local news reports that 3 Chinese military ships are surrounding a Vietnamese marine police vessel this morning and water cannon use continues against Vietnamese ships. We addressed the who, what, where, when and how of China’s HD-981 oil rig foray into Vietnamese waters here but, as we discuss below, the enduring question, as with many of China’s recently provocative actions in the Asia-Pacific, remains why?
The Wall Street Journal appears to be saving money by dispensing with journalists and using human drop boxes instead. Thus in the New York markets the “Hilsenramp” signal is already a well-known event which occurs at approximately 3pm on/during/after Fed meeting days, and is posted under the byline of “Jon Hilsenrath”. In simple packaged form it provides fast money speculators with a message from the B-Dud, otherwise known as William Dudley, President of the New York Fed, on why the Fed will back-up another run at still higher record highs. So today comes a drop box message with respect to ECB policy posted under the byline of “Brian Blackstone”.